Competition for Rail Grants Heats Up as Illinois and Florida Articulate Proposals

We all knew we’d have a fight on our hands after the Congress approved $8 billion in funds for high-speed rail back in February, and now the contest is entering prime time. California remains the nation’s biggest potential winner; its $30 billion project from San Francisco to Los Angeles already has $10 billion in funds approved by voters last November and the line itself is practically construction-ready. Illinois — wanting a line between Chicago and St. Louis — and Florida — envisioning fast connections between Orlando and Tampa — are particularly interested in not being left out. But their efforts aren’t identical and they prove that it’s high time the federal government define not only what makes a rail line qualified for funds, but also what percentage of total project costs should be covered by local sources.

Illinois Governor Pat Quinn (D) has asked his state’s lawmakers to include $400 million for high-speed rail in a $30 billion public works package currently being considered in Springfield. Previously, State Representative Elaine Nekritz (D) attempted to include $1 billion for the effort in the bill, but her effort was rebuffed by leadership. A 110 mph line between Chicago and St. Louis would cost $2.7 billion to build; it’s unclear where Mr. Quinn expects the rest of the money to come from, considering that he has previously suggested that he only expects to receive $500 million of the Recovery dollars. Midwest states as a whole announced last month their intentions to apply for $3.5 billion of the funds to build fast lines spreading out from Chicago to Madison, St. Louis, and Detroit.

Florida’s leadership, on the other hand, seems to expect that the feds will simply fork over $2 billion for a line between Orlando International Airport and Tampa. Funding for that project was approved by voters in 2000, only to be rejected three years later following a campaign against it by former governor Jeb Bush (R). Current governor Charlie Christ (R) seems more in favor of rail projects in general, but has done nothing at all to find state government funds for the system. After (unhelpful) comments by DOT Secretary Ray LaHood, Florida’s High-Speed Rail Authority mistakenly thinks that its project is the furthest along of any in the nation.

I’ll ignore for the moment the fact that Florida’s proposal is poorly designed; it won’t even serve downtown Orlando, precluding many of the potentially positive land use impacts of rail investment there.

The real question is whether Florida should get a huge funding boost if other states are willing to leverage local money in a way that it is not? Wouldn’t it be unfair if Florida got just as many federal dollars as Illinois or California, states that have been proactive in choosing to invest their own funds in their respective projects? If Florida got away with its costs being covered entirely by the federal government, why wouldn’t other states ask for the same treatment? What would be the incentive of investing local funds in such infrastructure projects?

It’s clear that Washington needs to be more explicit in defining its decision-making process for allocating rail funding; a line between San Francisco and Los Angeles, for instance, by definition deserves more federal money than one between Boise and Missoula, because the former would be used by far more people per route mile or construction dollar than the latter. But no policy currently on the books at DOT ensures that the former line would be picked for funding first. An outcome-based examination, leading directly to decisions about monetary outlays, needs to be codified and enforced.

Once projects have been cleared as appropriately cost-efficient for federal funding, Washington also doesn’t have an explicit policy about how much of costs to cover. The New Starts process used to judge and fund new transit lines results in seemingly random decisions about federal shares of construction costs: Washington will pay for 34% of the ARC Tunnel in New York, but 50% of the second phase of Sacramento’s South Corridor LRT. Why? No one knows, and that’s a problem because if states are applying for rail funds, they shouldn’t have to commit more than they need to simply because they’re afraid that DOT will hesitate if it’s asked to pay too much. Florida shouldn’t have 100% of its rail line’s price covered by Mr. LaHood if Illinois is going to pay for half of its line’s cost, so Washington should pay a standardized construction cost share for qualified projects.

I suggest that the federal government stick to a four-step process to fund and construct rail projects, modeled on the New Start and highway funding models:

States or regions study a project for consideration, using local funds;

That project is analyzed based on its projected ridership, cost per mile, environmental impacts, land development impacts, etc; it is scored by the DOT, and must meet a required minimum to receive federal funds (similar to how New Starts projects are considered today);

The federal government commits to 80% of the funding, with the other 20% of the money allocated by affected regions, states, or municipalities (highways are funded at an 80% federal share today);

The project is built.

Once a rigorous system to judge the projects (#2) is established, this would provide states the kind of predictable, reliable process necessary to make building rail in the United States feasible. Earmarks by powerful congressional leaders to their preferred projects should not be allowed, because it would dilute the federal government’s ability to pay for the most deserving projects.

If Illinois and Florida’s respective lines met DOT’s criteria, the respective state governments would simply have to commit to 20% of the overall funding, and then they would be guaranteed 80% back from Washington. A failure to appropriate at the state level like Florida now would simply not be an option.

Of course, the other option is a national rail infrastructure operation under direct control of the U.S. DOT, but that’s going nowhere fast considering conservative America’s steadfast unwillingness to allow the federal government to invest directly in communities…

Sensible suggestion. But just to be provocative: Should we be imagining a day when we no longer rely on ridership projections? Isn’t it odd that we treat ridership estimates as facts when they are so often so spectacularly wrong?

I wonder if we couldn’t have more rational discussions if we talked about things that are more factual. E.g. How much faster will various common trip pairs be? Why can’t we aggregate zillions of these potential trips to create a factual model of improved mobility, rather than a speculation about what people who live in an unknown future will do in response? Doesn’t the factual model provide a better basis for the economic outcomes that we want, such as continued growth in cities without having to build third and fourth runways in ever-more-impactful and expensive ways?

How about we start taking this rail stuff as seriously as the Interstate Project. The Federal Government needs to throw their weight behind it. 90 cents to the dollar should be provided by the Feds, just like they did back in the 50’s for the Interstate Project.
It will be just as lucrative, only more. And will be a smarter investment in the long run.

However, for the Stimulus funding, a willingness to fully fund a project is built into the bill.

Indeed, bearing in mind that we are talking about two distinct sums of money, one permitting full federal funding and one requiring a state match, may in fact address the question that the post has raised … the $0.5b for the Chicago / St. Louis line for works improving the line that both serve an immediate need and are some of the works required to get to Emerging HSR corridor status … and state funding to be able to apply for additional funding from the ongoing HSR appropriations.

Also, though, what about instead of calling it a 80/20 formula, why not call it a matching grant on top of what DOT would give out in ARRA funds for the merits of the project on its own with no state funding? So if they determine that the Illinois project w/out state funding is worthy of say .5 bn in funds, what about awarding them an addition 400 million in funds to match the 400 million the state is willing to pony up? Of course, immediately the question is what do you do with California since they’ve already floated 10 bn in bonds and that’s more than the ARRA funds in total. Maybe you do it only for appropriations expected to be paid out for the life of the HSR ARRA funds (goes to 2012?). Point is, I bet there’s a way to reward states for putting in their own money without violating the spirit of the ARRA funds that were meant to have no state funding strings attached.

Also, though, what about instead of calling it a 80/20 formula, why not call it a matching grant on top of what DOT would give out in ARRA funds for the merits of the project on its own with no state funding? So if they determine that the Illinois project w/out state funding is worthy of say .5 bn in funds, what about awarding them an addition 400 million in funds to match the 400 million the state is willing to pony up? Of course, immediately the question is what do you do with California since they’ve already floated 10 bn in bonds and that’s more than the ARRA funds in total. Maybe you do it only for appropriations expected to be paid out for the life of the HSR ARRA funds (goes to 2012?). Point is, I bet there’s a way to reward states for putting in their own money without violating the spirit of the ARRA funds that were meant to have no state funding strings attached.
Sorry, forgot to add great post! Can’t wait to see your next post!

There are a lot of corridors submitted for possibilities. There are 10 all together.
Cali HSR, the Texas T-Bone (South Centrail, Florida (although, as we know, they’ve hit some road bumps), and the Midwest High Speed Rail Initiative (which connects a lot more than just Illinois) are the top contenders as far as I know.